Steer a course for Cohen & Steers
This real estate-focused investment manager, which reports today, deserves attention.
On Wednesday, after the markets close, the financial world will learn the latest earnings news on a company that's received little fanfare.
Cohen & Steers (CNS) may deserve a place on our "watch list" for a number of reasons. Since its inception in 1986 the New York City company operates as an investment manager in the U.S., Japan and elsewhere internationally. It has offices in London, Brussels, Hong Kong, Tokyo and Seattle, and serves institutional and individual investors around the world
CNS focuses on global real estate securities, global-listed infrastructure, real assets, large-cap value stocks and preferred securities. It primarily manages institutional accounts, open-end mutual funds, and closed-end mutual funds.
None of its exchange-traded funds (ETFs) seem to be that popular with investors. Yet, when you check out its website, you'll find the company knows a lot about REITs (real estate investment trusts). Also, one of the company's officers, Executive V.P. Thomas Bohjalian, offers a great article titled "REITs: Building on Success," which is a must-read for serious investors.
The parent CNS also manages alternative investment strategies such as hedged real estate securities portfolios and private real estate strategies for qualified investors. In addition, it provides distribution services for its funds and advisory consulting services to model-based strategies accounts.
The company also manages its sponsored open-end and closed-end mutual funds, U.S. and non-U.S. pension plans, endowment funds, foundations, and sub-advised funds for other financial institutions. It has an impressive array of ways to make revenue flow and grow.
Before looking at the analysts' projections for Wednesday's earnings and revenue numbers, take a look at one of the company's ETFs, the Cohen & Steers Global Realty Majors ETF (GRI), which recently hit a 52-week high and, as of March 30, yields 6.68%. GRI has an appealing three-year average annual return of nearly 14%. If dividends were reinvested at that return rate, $10,000 would turn into $20,000 in a little over five years!
Yet, the three-month average daily volume is just slightly more than 24,000 shares traded per day, and the fund's net assets as of the end of November 2012 were less than $100 million. GRI seeks to replicate the performance of an index called the Cohen & Steers Global Realty Majors Index.
This index consists of the largest and most liquid securities within the global real estate universe that Cohen & Steers Capital Management believes are likely to lead the global securitization of real estate.
Its top holding is "The Mitsubishi Estate," which boasts the leading position in the Japanese market, operating a spectrum of businesses in diverse fields related to real estate, including an office building business centered on the Marunouchi district in central Tokyo, a retail property business, a residential business and a hotel business.
CNS announced on April 3 the addition of a leading commodities research and investment team to its New York headquarters. The four-member commodities team joined the firm effective April 8 to further expand Cohen & Steers' capabilities in real assets investing.
"The expansion of our capabilities in commodities speaks to Cohen & Steers' long-term commitment to investment leadership in real assets strategies," said Martin Cohen, co-chairman and co-chief executive officer of Cohen & Steers. "Along with our market-leading real estate and listed infrastructure capabilities, we believe commodities are an important component of well-diversified investment portfolios."
As you look at a five-year chart of CNS you can see how the shares rose from the ashes of the real estate debacle of 2007-2009 and have soared prosperously. Its free cash flow took a nosedive in early 2012 but has since skyrocketed.
The estimated EPS from five analysts on average is looking for the same 41 cents per share for this quarter as the year-ago quarter. When it comes to sales growth and revenue the analysts have an average consensus estimate of $73.65 million, which would be a 15.6% increase over the year-ago quarter.
From my perspective, the P/E ratio of almost 26 is high, and with a price-per-share of $38.26 and an 80-cent dividend, the yield-to-price is a meager 2.09%. However, the company has no debt and as of the end of 2012 had around $226 million in total cash. Is a dividend increase in the offing? That could boost the stock price even higher.
Company Co-Founder, Co-Chairman and Co-CEO Martin Cohen, as of Jan. 30, 2013, owned over 10,564,000 shares and his partner Robert Steers owned more than 4,394,000 shares. In fact 58% of the outstanding shares of CNS are owned by insiders and "5%" owners! Now that's what I call a leadership team with "skin in the game" in a big way!
In this exciting season of earnings reports it's easy to overlook some of the lesser-known names like Cohen & Steers. In the world of smaller-cap companies it has a business model that's poised to generate growth for years to come. The company will hold a conference call to discuss its first-quarter financial results Thursday at 11 a.m. ET.
At the time of publication the author had no position in any of the stocks mentioned.
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